Decision makers and analysts look deeply into profitability ratios to identify trends in a company’s profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitability ratios. Check all that apply.If a company has a profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales. If a company’s operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. An increase in the return on assets ratio implies an increase in the assets a firm owns. If a company issues new common shares but its net income does not increase, return on common equity will increase. Decision makers and analysts look deeply into profitability ratios to identify trends in a company's profitability. Profitability ratios give insights intoboth the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitabilityratios. Check all that apply.If a company has a profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales.If a company's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes.An increase in the return on assets ratio implies an increase in the assets a firm owns.If a company issues new common shares but its net income does not increase, return on common equity will increase.

The profitability ratio tells us about the method to be used to generate the income or its revenue.

Answered: Decision makers and analysts look…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Decision makers and analysts look deeply into profitability ratios to identify trends in a company’s profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitability ratios. Check all that apply.

If a company has a profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales.

If a company’s operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes.

An increase in the return on assets ratio implies an increase in the assets a firm owns.

If a company issues new common shares but its net income does not increase, return on common equity will increase.

Decision makers and analysts look deeply into profitability ratios to identify trends in a company's profitability. Profitability ratios give insights into
both the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitability
ratios. Check all that apply.
If a company has a profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales.
If a company's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes.
An increase in the return on assets ratio implies an increase in the assets a firm owns.
If a company issues new common shares but its net income does not increase, return on common equity will increase.

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